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Sunday, May 10, 2015

AAPL Collar Update #3 - #4 (Stock Purchase)

May 4AnalysisStock closed at $127 on Friday. Both May 1 hedges expired worthless. The was a brief opportunity to roll puts for around 1.20 a day before expiration but not quite enough to recover the cost of the roll of the puts up to the 126 stirke.Being so close to expiration as the price rallied the next day, the option premium evaporated.The price action of the stock after earnings indicate a decline may further occur. The stock topped out around 134 (inside the EM) and proceeded to have several large down days in a row. This has certainly created a large amount of overhead supply. There will need to be several tests of this supply zone before it can break through.AAPL will be trading ex-div on May 7, payable 0.52/shr on May 14.Trades1. Purchase new hedgesJune 5 134 C - sold for 1.90June 5 125 P - buy for 1.97This creates the long the 125 - 134 synthetic call spread for 0.07 X 6 (63) debit, protecting net long 625 shares.Value+625 AAPL shares X 127 = 79 375+0.52 div/shr payable after May 7 = 352+6c Jun 5 125 Put X 1.97 = 1182- 6c Jun 5 134 Call X 1.90 = -1140-End